December 15, 2008
DiNAPOLI REPORT: AIM PROGRAM HELPS STABILIZE
CITY FINANCES, BUT FUTURE BUDGET GAPS LOOM
New York State’s cities have benefited from
increases in state aid and improved financial planning under the Aid and
Incentives to Municipalities (AIM) program according to a report
released by State Comptroller Thomas P. DiNapoli. However, most cities
project future budget deficits and will face increased fiscal pressures
brought about by the current economic downturn.
“State revenue sharing and increased accountability
and planning have helped to stabilize New York’s cities,” said DiNapoli.
“Now, even in the face of our fiscal crisis, we can’t just pass
the State’s troubles on to local governments. In the end, it’s
the same taxpayers who’ll be footing the bill. AIM is working; it shouldn’t
be thrown out with the bathwater.
“Many cities already faced sizable budget
deficits even before this became an ‘official’ recession. This report
demonstrates how vitally important it is, especially in tough fiscal times,
for cities to continue multi-year financial planning.”
Under the AIM program, cities that exhibited
some signs of fiscal stress received additional AIM funding. AIM fiscal
stress indicators include: city property full valuation per capita less
than 50 percent of the statewide average; less than 40 percent real property
tax margin; population loss greater than 10 percent since 1970; and a poverty
rate greater than 150 percent of the statewide average.
DiNapoli’s report analyzed 41 cities that
receive at least $100,000 in increased revenue sharing under the state’s
AIM program. They are required by state law to submit a Fiscal Performance
Plan to the State Comptroller and Director of the Budget which includes
multi-year budget projections. The report summarizes these fiscal
trends and compares these plans by city.
The report notes that there is continued
pressure on city expenditures, while many significant revenue streams will
likely be hurt by the recent economic downturn. Many cities may be
faced increasing taxes or fees to maintain budget balance. However,
the property tax burden is already significant in most cities and some
cities may have a limited ability to increase property taxes because they
are near or at their constitutional tax limit.
For a copy of the report, visit: http://www.osc.state.ny.us/localgov/pubs/research/fiscalperfplans.pdf.